In the recently completed 2011 legislative session, Senate Bill 17 (Keller, D-Bernalillo & Neville, R-Aztec), a bill designed to complete SIC reforms by removing the governor as chairperson, passed with wide bi-partisan support.
It now sits on the governor’s desk waiting to be signed. SB-17 was carefully crafted in the interim, by the bipartisan Investment Oversight Committee, long before the recent gubernatorial election.
It is composed of original sections from the 2010 bill including sections to ensure minority party legislative appointments.
It now also includes an amendment that allows the Governor to serve for two more years in the Chairperson role before removing the position all together.
Signing SB-17 provides our new governor with an appropriate chance to oversee a transition and recovery of lost funds and then turn over the reins at the SIC.
In 2010, the legislature passed landmark reforms (Senate Bill 18) of the State Investment Council (SIC)in response to conflicts of interest, legal investigations and governance challenges at the SIC. These reforms reflected multiple governance recommendations from the 2010 interim independent bipartisan Enis Knupp Report.
The reforms achieved by SB-18 included: making the state investment officer serve the SIC rather than being personally appointed by the governor, requiring 10 years of investment expertise for all appointed board members, and diffusing the influence of any single individual by moving four appointments out of the executive branch.
All of these changes have been important in reforming the SIC. However, the top recommendation of the Enis Knupp Report was to remove the governor as chairperson of the SIC.
While this was included in the original 2010 SB-18, the provision removing the governor was stripped out in the final hours of the session to enable the other reforms to move forward. Regardless of who is serving as governor, a change in who serves as SIC chairperson is critical to eliminate conflicts of interest, potential for pay-to-play and favoritism and to maintain the appropriate the level of fiduciary responsibility and expertise.
New Mexico is the only state in the country where the governor is personally in charge of similar permanent fund oversight.
We expect our governor to lead the state and appoint and hire staff to implement the vision they were elected to deliver. We do not, however, expect him or her to have the expertise or direct responsibility for approving the buying and selling of billions in stocks, bonds and alternative investments with our children’s endowments.